PPP projects to soon dock at new MCA

NEW DELHI: For all the infrastructure companies waiting in the wings to participate in port development, there is a ray of hope. Amendments to the model concession agreement (MCA), which lead to delays in many projects, is likely to be finalised soon. A committee of secretaries is expected to take up the issue next month.

The panel, chaired by the Cabinet secretary, is likely deliberate on the new MCA that will serve as the basis for concessions for public-private partnership (PPP) projects in ports in future, an official told ET. The MCA has been held up on account of differences between Planning Commission and the shipping ministry.

According to the Planning Commission, a one-time upfront tariff linked to the wholesale price index, similar to the practice in the roads sector, is more desirable compared to the revenue-sharing model. The ministry of shipping, road transport & highways, however, has questioned this since it has found ambiguities in the commission's proposal on how the upfront tariff will be decided.

The Planning Commission expressed doubts over the revenue-sharing model as there is the possibility of business not taking off as expected and the government ending up with below-expected returns as the company that makes the most attractive revenue-sharing offer bags the project.

Most projects in the shipping sector are to be implemented on a PPP basis and MCA which outlines the roles and responsibilities of all the participating agencies is crucial in such a scenario. The government had set up an inter-ministerial group with representatives from both the shipping ministry and Planning Commission to rework the MCA. However, with the differences remaining unresolved, Cabinet secretary has had to step in and call the meeting.

The government wants projects in the port sector to roll out and go on stream soon. However, even projects that have been approved by the PPP Appraisal Committee cannot move forward and call bids in the absence of the MCA. A large number of ports on the east and west coasts are in various stages of expanding capacity.

Even if the MCA is finalised in two months, it would be an uphill task for the shipping ministry to roll out 17-18 projects this fiscal as the bidding process will take time.